Repeal of New York State’s MMA Prohibition: The Good, The Bad, and The Be Careful What You Wish For

Time now for a reality check about how the New York State Legislature does business.Legalization does for Mixed Martial Arts (MMA) what the carried interest tax loophole does for income inequality. It institutionalizes economies of scale through mandates that push breakeven into budget busting territory for all but the biggest operators. This bill was sold on the promise that it would make the state a lot of money. The bill has now come due.

Quid pro quo is a suite of best practices from someone savvy enough to know that kick boxing is a different species altogether fromsingle discipline martial arts. Look no further than literary critic James Wood’s observation that “grounded journalistic comprehension of a foreign [culture] is rare”, because we tend “to proceed on the not obviously misguided premise that, since American reality is preoccupyingly interesting, [pronouncements on these subjects] should function as a kind of brilliant cultural selfie.” (“Floating Island” by James Wood in The New Yorker on March 21, 2016) From S05949, Article 41, §1001: “Authorized combative sports include, amateur and professional boxing, wrestling, sparring, kick boxing, single discipline martial arts and mixed martial arts, pursuant to the provisions of this article.”

Keyword character and competence for everyonehastogetlicensed. From §1007: “with respect to all authorized professional combative sports in this state, all corporations, entities, persons, referees, judges, match-makers, timekeepers, professionals, and their managers, trainers, and seconds shall be licensed by the commission.” §1004 makes it clear that “The commission shall have and is hereby vested with the sole direction, management, control and jurisdiction over: (4) all gyms, clubs, training camps and other organizations that maintain training facilities to prepare persons for participation in authorized professional combative sports.” Checking the equal protection box of the Interstate Commerce Clause, temporary work permits under §1011 pro-rate best practices for non-residents.

The penalties for going rogue now are Draconian. At the very least, non-compliance will result in a rap sheet. Civil penalties under §1019 range from “ten thousand dollars or twice the amount of gain derived therefrom whichever is greater, or for a subsequent violation twenty-five thousand dollars or twice the amount of gain derived therefrom whichever is greater. The attorney general is hereby empowered to commence judicial proceedings to recover such penalties and to obtain injunctive relief to enforce the provisions of this section.”

“A Moon for the Misbegotten” also casts its shadow over authorized sanctioning entities. We all know who that is. (“What Shall It Profit a Man If He Gains the Whole World but Forfeits His Soul?” by Miguel Rivera in Muay Thaimes®, Volume IV, No. 3, Winter of 2010) It is now in the crossfire of policing the fleecing in all of those conflict of interest purse parsing practices that work their way up the chain of command to an 8½% gross receipts tax. Remember what happened to Al Capone, when he didn’t pay his taxes?

Well truth or dare means business with new commission subpoena powers riding shotgun where §1016 requires “the organization that promotes, sanctions or otherwise participates in the proposition, selection, or arrangement of one or more professionals for a contest must file with the commission a written statement executed under penalty of perjury” to basically give up the encryption on its iPhone.

Then there are these §1018 specific prohibitions:

“Any person, including any corporation and the officers thereof, any physician, referee, judge, timekeeper, professional, manager, trainer or second, who shall promote, conduct, give or participate in any sham or collusive authorized professional combative sports, shall be deprived of his or her license by the commission and any other appropriate legal remedies.”

“No licensed promoter or matchmaker shall knowingly engage in a course of conduct in which fights are arranged where one professional has skills or experience significantly in excess of the other professional so that amismatch results with the potential of physical harm to the professional.”

To give you some idea how much costs matter in this business, I’ve been told that Glory 12 in NYC lost somewhere in the neighborhood of a million dollars, despite filling the house without comps. While Glory World Series isn’t the UFC, neither is anyone else. Economies of scale have a way of crushing irrational exuberance. How much opportunity actually knocks, there’s no such thing as a free lunch nor any commercial amnesty from costing out such best practice benefits as:

§1010(2) “Any professional applying for a license or renewal of a license to participate in combative sports under this article shall undergo a comprehensive physical examination…If, at the time of such examination, there is any indication of brain injury,…the professional shall be required to undergo further neurological examinations by a neurologist including magnetic resonance imaging or other medically equivalent procedures…The costs of all such examinations for professional boxers shall be assumed by the state…the costs of all such examinations for professional mixed martial arts participants shall be assumed by the applicant or promoter with which the professional mixed martial arts participant is affiliated, regardless of provider.” Gottcha!

§1015(11) “All persons, parties or corporations having licenses as promoters…shall continuously provide accident insurance for: medical, surgical and hospital care, with a minimum limit of fifty thousand dollars for injuries…and for a payment of fifty thousand dollars to the estate of any deceased athlete…and, medical, surgical and hospital care with a minimum limit of one million dollars for the treatment of a life-threatening brain injury sustained in a program operated under the control of such licensed promoter, where an identifiable, causal link exists between the professional licensee’s participation in such program and the life-threatening brain injury.”

§1015(9) “Before a license shall be granted to a person or corporation to conduct an authorized professional combative sport, the applicant shall execute and file with the secretary of state a bond…conditioned for the faithful performance by said corporation of the provisions of this article and the rules and regulations of the commission…In case of default in such performance, the commission may impose upon the delinquent a penalty in the sum of not more than one thousand dollars for each offense, which may be recovered by the attorney-general in the name of the people of the state of New York in the same manner as other penalties are recovered by law; any amount so recovered shall be paid into the treasury.

§1015(10) In addition to the bond required by subdivision nine of this section, each applicant for a license to conduct an authorized professional combative sport shall execute and file with the secretary of state a bond…conditioned for and guaranteeing the payment of professionals’ and professional wrestlers’ purses, salaries of club employees licensed by the commission, and the legitimate expenses of printing tickets and all advertising material.

New York differs from the rest of the country only in the institutional power of Wall Street and an epidemic of homelessness, both of which are flip sides of the same income inequality coin. In a business with economies of scale, those with low end margins are the ones most likely to be squeezed by a near tripling of the gross receipts tax. In the words of a U.S. Supreme Court Chief Justice, who wasn’t so out of touch with reality as some now on the bench, “the power to tax is the power to destroy”. (Chief Justice John Marshall in McCulloch v. Maryland, 1819)

Since boutique shows are the portals for entry level jobs, be careful what you wish for. The bill takes effect 120 days after it becomes law. Except for putting ammies on the regulatory radar, they’re not going to get any of the best practice benefits that are newly mandated in this bill. Who’s exempt from brain damage, because they’re not getting paid?

S05949, Article 41: Combative Sports

§ 1001. Combative sports authorized. Combative sports conducted under the supervision of the commission, under the supervision of an authorized sanctioning entity, or as provided for in section one thousand twenty-one of this article, are hereby authorized. Authorized combative sports include, amateur and professional boxing, wrestling, sparring, kick boxing, single discipline martial arts and mixed martial arts, pursuant to the provisions of this article.

§ 1002. Combative sports prohibited. The conduct of combative sports outside the supervision of the commission or an authorized sanctioning entity is prohibited.

§ 1004. Jurisdiction of the commission. The commission shall have and is hereby vested with the sole direction, management, control and jurisdiction over:

1 All authorized combative sports;

2 All licenses or permits granted by the commission to any and all persons or entities who participate in authorized combative sports;

3 All determinations regarding the authorization of amateur and professional sanctioning entities;

4 All gyms, clubs, training camps and other organizations that maintain training facilities to prepare persons for participation in authorized professional combative sports;

5 The promotion of professional wrestling exhibitions to the extent provided for in this article; and

6 All contracts directly related to the conduct of authorized professional combative sports in the state of New York.

§ 1006. Sanctioning entities. The commission shall promulgate regulations establishing a process by which entities may be recognized and approved by the commission as authorized sanctioning entities for a period of time to be established by the commission, during which the entity will be allowed to oversee and conduct combative sports within the state of New York. The commission may, in its reasonable discretion, limit the scope of any recognition and approval of a sanctioning entity to the oversight and conduct of one or more specific combat disciplines, amateur or professional combative sports, or to any combination of the foregoing based on the qualifications, integrity and history of the entity seeking authorization as a sanctioning entity.

§ 1007. Licenses; general provisions.

1 Except as otherwise provided in sections one thousand six, one thousand eleven, and one thousand seventeen of this article, with respect to all authorized professional combative sports in this state, all corporations, entities, persons, referees, judges, match-makers, timekeepers, professionals, and their managers, trainers, and seconds shall be licensed by the commission. No such corporation, entity or person shall be permitted to participate, either directly or indirectly, in any authorized professional combative sport, or the holding thereof, or the operation of any training facility providing contact sparring maintained either exclusively or in part for the use of professional boxers or professional mixed martial arts participants, unless such corporation or persons shall have first procured a license from the commission. The commission shall establish by rule and regulation licensing standards for all licensees.

4 Any license, temporary work permit or other authorization issued under the provisions of this article may be revoked or suspended by the commission when the licensee, permittee or authorized entity has, in the judgment of the commission, violated any provision of this article, rule or order of the commission, demonstrated conduct detrimental to the interests of authorized combative sports generally or to the public interest, or when the commission deems it to be in the best interests of the health and safety of the licensee.

§ 1008. Licenses; judges. 1. Except as otherwise provided in sections one thousand six and one thousand seventeen of this article, only a person licensed by the commission, as a combative sports judge, may judge an authorized professional combative sport within the state. Judges for any authorized professional combative sport under the jurisdiction of the commission shall be selected by the commission from a list of qualified licensed judges maintained by the commission.

§ 1009. Licenses; entities.

1 (a) Except as otherwise provided in sections one thousand six and one thousand seventeen of this article, only entities licensed by the commission may conduct an authorized professional combative sport within the state. The commission may, in its discretion, issue a license to conduct or hold authorized professional combative sports, subject to the provisions hereof, to any person or corporation duly incorporated, or limited liability company authorized, under the laws of the state of New York.

2. (a) The commission may, in its discretion and in accordance with regulations adopted by the commission to protect the health and safety of professionals in training, issue a license to operate a training facility providing contact sparring maintained either exclusively or in part for the use of professional combative sports participants.

§ 1010. Licenses: Professionals.

1 Except as otherwise provided in sections one thousand six, one thousand eleven and one thousand seventeen of this article, only persons licensed by the commission shall compete in authorized professional combative sports.

2 Any professional applying for a license or renewal of a license to participate in combative sports under this article shall undergo a comprehensive physical examination including clinical neurological examinations by a physician approved by the commission. If, at the time of such examination, there is any indication of brain injury, or for any other reason the physician deems it appropriate, the professional shall be required to undergo further neurological examinations by a neurologist including magnetic resonance imaging or other medically equivalent procedures. The commission shall not issue a license to a professional until such examinations are completed and reviewed by the commission. The results of all such examinations herein required shall become a part of the professional’s permanent medical record as maintained by the commission. The costs of all such examinations for professional boxers shall be assumed by the state if such examinations are performed by a physician or neurologist approved by the commission; the costs of all such examinations for professional mixed martial arts participants shall be assumed by the applicant or promoter with which the professional mixed martial arts participant is affiliated, regardless of provider.

§ 1011. Temporary working permits. The commission may issue temporary working permits to professionals, their managers, trainers and seconds. A temporary working permit shall authorize the employment of the holder of such permit to engage in a single authorized professional combative sport at a specified time and place. The commission may require that professionals applying for temporary working permits undergo a physical examination and neurological test or procedure, including magnetic resonance imaging or medically equivalent procedure. Temporary working permits shall expire upon the completion of the single authorized professional combative sport and any subsequent evaluations or inspections required by the commission. The fee for such temporary working permit shall be established by the commission pursuant to rule.

8 Establish parameters and standards for rings, combat surfaces and appurtenances thereto; and

9 Establish such other rules and conditions as are necessary to effectuate the commission’s purpose.

§ 1015. Conduct of authorized professional combative sports.

2 No person under the age of eighteen years shall participate in any authorized professional combative sports, and no person under sixteen years of age shall be permitted to attend thereat as a spectator, provided, however, that a person under the age of sixteen may be permitted to attend as a spectator if accompanied by a parent or guardian.

3 Except as otherwise provided in sections one thousand six and one thousand seventeen of this article, at each authorized professional combative sport, except where conducted solely for training purposes, there shall be in attendance a duly licensed referee who shall direct and control the same. There shall also be in attendance, except where conducted solely for training purposes, three duly licensed judges who shall at the termination of each such authorized professional combative sport render their decision. The winner shall be determined in accordance with a scoring system prescribed by the commission.

6 Except as otherwise provided in sections one thousand six and one thousand seventeen of this article, all professionals must be examined by a physician designated by the commissionbefore entering the ring or combat surface and each such physician shall immediately file with the commission a written report of such examination. The cost of any such examination, as prescribed by a schedule of fees established by the commission, shall be paid by the corporation conducting the authorized professional combative sport to the commission. It shall be the duty of every person or corporation licensed to conduct an authorized professional combative sport, tohave in attendance at every authorized professional combative sport, at least one physician designated by the commission as the rules shall provide. The commission may establish a schedule of fees to be paid by the licensee to cover the cost of such attendance.

7 The physician shall terminate any authorized professional combative sport if in the opinion of such physician any professional has received severe punishment or is in danger of serious physical injury. In the event of any serious physical injury, such physician shall immediately render any emergency treatment necessary, recommend further treatment or hospitalization if required, and fully report the entire matter to the commission within twenty-four hours and if necessary, subsequently thereafter. Such physician may also require that the injured professional and his or her manager remain in the ring or on the premises or report to a hospital after the contest for such period of time as such physician deems advisable. Any professional licensed under this article rendered unconscious or suffering head trauma as determined by the attending physician shall be immediately examined by the attending commission physician and shall be required to undergo neurological examinations by a neurologist including but not limited to magnetic resonance imaging or medically equivalent procedure.

8 Such physician may enter the ring at any time during an authorized professional combative sport and may terminate the match if in his or her opinion the same is necessary to prevent severe punishment or serious physical injury to a professional.

9 Before a license shall be granted to a person or corporation to conduct an authorized professional combative sport, the applicant shall execute and file with the secretary of state a bond in an amount to be determined by the commission, to be approved as to form and sufficiency of sureties thereon by the secretary of state, conditioned for the faithful performance by said corporation of the provisions of this article and the rules and regulations of the commission…In case of default in such performance, the commission may impose upon the delinquent a penalty in the sum of not more than one thousand dollars for each offense, which may be recovered by the attorney-general in the name of the people of the state of New York in the same manner as other penalties are recovered by law; any amount so recovered shall be paid into the treasury.

10 In addition to the bond required by subdivision nine of this section, each applicant for a license to conduct an authorized professional combative sport shall execute and file with the secretary of state a bond in an amount to be determined by the commission to be approved as to form and sufficiency of sureties thereon by the secretary of state, conditioned for and guaranteeing the payment of professionals’ and professional wrestlers’ purses, salaries of club employees licensed by the commission, and the legitimate expenses of printing tickets and all advertising material.

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11 All persons, parties or corporations having licenses as promoters or who are licensed in accordance with section one thousand seventeen of this article shall continuously provide accident insurance or such other form of financial guarantee deemed acceptable by the commission, for the protection of licensed professionals and professional wrestlers, appearing in authorized professional combative sports or wrestling exhibitions. Such accident insurance or financial guarantee shall provide coverage to the licensed professional for: medical, surgical and hospital care, with a minimum limit of fifty thousand dollars for injuries sustained while participating in any program operated under the control of such licensed promoter and for a payment of fifty thousand dollars to the estate of any deceased athlete where such death is occasioned by injuries received in this state during the course of a program in which such licensed professional or professional wrestler participated under the promotion or control of any licensed promoter; and, medical, surgical and hospital care with a minimum limit of one million dollars for the treatment of a life-threatening brain injury sustained in a program operated under the control of such licensed promoter, where an identifiable, causal link exists between the professional licensee’s participation in such program and the life-threatening brain injury. Where applicable, professional licensees shall be afforded the option to supplement the premiums for the accident insurance or financial guarantee to increase the coverage beyond the minimum limits required by thissubdivision. The commission may from time to time, promulgate regulations to adjust the amount of such minimum limits. The failure to provide such insurance as is required by this subdivision shall be cause for the suspension or the revocation of the license of such defaulting entity.

12 (a) Every individual, corporation, association or club holding any professional or amateur combative sport, including any professional wrestling match or exhibition, for which an admission fee is charged or received, shall notify the athletic commission at least ten days in advance of the holding of such contest. All tickets of admission to any such professional or amateur combative sport or professional wrestling match or exhibition shall be procured from a printer duly authorized by the state athletic commission to print such tickets and shall bear clearly upon the face thereof the purchase price and location of same.

§ 1016. Required filings.

1 The organization that promotes, sanctions or otherwise participates in the proposition, selection, or arrangement of one or more professionals for a contest must file with the commission a written statement executed under penalty of perjury stating (a) all charges, expenses, fees, and costs that will be assessed against any professional participating in the event; (b) all payments, benefits, complimentary benefits and fees the organization or entity will receive for its affiliation with the event; (c) the name of the promoter; (d) sponsor of the event; and (e) all other sources, and such other and additional information as required by the commission. Such written statement shall be filed in a form and manner acceptable to the commission.

2 The promoter, organizer, producer or another that participates in the proposition, selection, or arrangement of one or more professionals for a contest must file with the commission a written statement under penalty of perjury detailing all charges, fees, costs and expenses by or through the promoter on the professional pertaining to the event, including any portion of the professional’s purse that the promoter will receive and training expenses and all payments, gifts or benefits the promoter is providing to any sanctioning organization affiliated with the event. Such written statement shall be filed in a form and manner acceptable to the commission.

3 The promoter, organizer, producer or another that participates in the proposition, selection, or arrangement of one or more professionals for a contest must file with the commission a copy of any agreement in writing to which the promoter is a party with any professional participating in the match.

4 All contracts calling for the services of a professional in an authorized professional combative sport and entered into by licensed promoters, professionals or managers as one or more of the parties in such contracts, including those contracts which relate to the rights to distribute, televise or otherwise transmit any authorized professional combative sport over the airwaves or by cable shall be subject to the approval of the commission and copies thereof shall be filed with the commission by such corporation, professional or manager within forty-eight hours after the execution of such contract and at least ten business days prior to any bouts, or the first of any series of bouts, to which they relate. The commission may waive such filing deadline for good cause shown.

§ 1018. Prohibited conduct.

3 Any person, including any corporation and the officers thereof, any physician, referee, judge, timekeeper, professional, manager, trainer or second, who shall promote, conduct, give or participate in any sham or collusive authorized professional combative sports, shall be deprived of his or her license by the commission and any other appropriate legal remedies.

4 No licensed promoter or matchmaker shall knowingly engage in a course of conduct in which fights are arranged where one professional has skills or experience significantly in excess of the other professional so that a mismatch results with the potential of physical harm to the professional.

§ 1019. Penalties.

1 A person who knowingly advances or profits from a prohibited combative sport shall be guilty of a class A misdemeanor, and shall be guilty of a class E felony if he or she has been convicted in the previous five years of violating this subdivision.

2 Any person who knowingly advances or profits from a prohibited combative sport shall also be subject to a civil penalty not to exceed for the first violation ten thousand dollars or twice the amount of gain derived therefrom whichever is greater, or for a subsequent violation twenty-five thousand dollars or twice the amount of gain derived there from whichever is greater. The attorney general is hereby empowered to commence judicial proceedings to recover such penalties and to obtain injunctive relief to enforce the provisions of this section.

3 Any person or corporation who directly or indirectly conducts any combative sport without first having procured an appropriate license, or having been designated an authorized sanctioning entity as prescribed in this article shall be guilty of a misdemeanor. Any person who participates in a combative sport as a referee, judge, match-maker, timekeeper, professional, manager, trainer, or second without first having procured an appropriate license as prescribed in this article, or where such combative sport is prohibited under this article shall be guilty of a misdemeanor.

4 Any corporation, entity, person or persons, licensed, permitted or otherwise authorized under the provisions of this article, that shall knowingly violate any rule or order of the commission or any provision of this article, in addition to any other penalty by law prescribed, shall be liable to a civil penalty not to exceed ten thousand dollars for the first offense and not to exceed twenty-five thousand dollars for the second and each subsequent offense, to be imposed by the commission, to be sued for by the attorney-general in the name of the people of the state of New York if directed by the commission. The commission, for cause shown, may extend the time for the payment of such penalty and, by compromise, may accept less than the amount of such penalty as imposed in settlement thereof. For the purposes of this section, each transaction or statutory violation shall constitute a separate offense, except that a second or subsequent offense shall not be deemed to exist unless a decision has been rendered in a prior, separate and independent proceeding.

5 On the first infraction of rules or regulations promulgated pursuant to subdivision two of section one thousand nine of this article, which infraction may include more than one individual violation, the commission may impose a civil fine of up to two hundred fifty dollars for each health and safety violation and may suspend the training facility’s license until the violation or violations are corrected. On the second such infraction, the commission may impose a civil fine of up to five hundred dollars for each health and safety violation and may suspend the training facility’s license until the violation or violations are corrected. On the third such infraction or for subsequent infractions, the commission may impose a civil fine of up to seven hundred fifty dollars for each health and safety violation and may revoke the training facility’s license.

6 Any individual, corporation, association or club failing to fully comply with paragraph (a) of subdivision twelve of section one thousand fifteen of this article shall be subject to a penalty of five hundred dollars to be collected by and paid to the department of state. Any individual, corporation, association or club is prohibited from operating any shows or exhibitions until all penalties due pursuant to this section and taxes, interest and penalties due pursuant to article nineteen of the tax law have been paid.

§ 1020. Subpoenas by commission; Oaths. The commission shall have authority to issue, under the hand of its chairperson, and the seal of the commission, subpoenas for the attendance of witnesses before the commission. A subpoena issued under this section shall be regulated by the civil practice law and rules.

§ 1022. Disposition of receipts. All receipts of the commission shall be paid into the state treasury.

§ 3. Subdivision 1 of section 451 of the tax law, as amended by section 1 of part F of chapter 407 of the laws of 1999, is amended to read as follows:

1 “Gross receipts from ticket sales” shall mean the total gross receipts of every person from the sale of tickets to any authorized combative sport held in this state, and without any deduction whatsoever for commissions, brokerage, distribution fees, advertising or any other expenses, charges and recoupments in respect thereto.

§ 4. Section 451 of the tax law is amended by adding a new subdivision4 to read as follows:

4 “Authorized combative sport” shall mean any combative sport authorized pursuant to section one thousand one of the general business law.

§ 5. Section 452 of the tax law, as amended by section 2 of part F of chapter 407 of the laws of 1999, is amended to read as follows: On and after the effective date of this subdivision, a tax is here by imposed and shall be paid upon the gross receipts of every person holding any authorized combative sport in this state, other than any professional or amateur boxing, sparring or wrestling exhibition or match, exclusive of any federal taxes as follows:

(a) eight and one-half percent of gross receipts from ticket sales; and

(b) three percent of the sum of (i) gross receipts from broadcasting rights, and (ii) gross receipts from digital streaming over the internet, except that in no event shall such tax imposed pursuant to this paragraph exceed fifty thousand dollars for any match or exhibition.

§ 11. This act shall take effect on the first day of the first month 6 next succeeding the one hundred twentieth day after it shall have become a law and shall apply to gross receipts from combative sports held on or after that date; provided, however, that the addition, amendment and/or repeal of any rule or regulation of the state athletic commission necessary for the implementation of this act on its effective date is authorized to be made on or before such effective date.